How does a 15K a month portfolio look like ? I'm a beginner investor

[Mike Mutabazi]

Hello BiggerPockets Family,

I'm new to REI, How many houses/ doors does it take to cash flow 15k net profit every month ?

[Mathew Pezon]

Hello and welcome to the BiggerPockets community!

The number of properties needed to generate $15k in net profit each month can vary greatly depending on several factors:

• Purchase price and down payment: More expensive homes require higher initial investment, but may also generate higher rental income. More affordable properties may cash flow well but take longer to scale.
  
• Rental rates in your market: Locations with higher rents (e.g. $2k/month) will require fewer properties than areas with lower rent (e.g. $800/month). Research rental comps in your target neighborhoods.
  
• Expense ratios: Repairs, vacancies, property taxes, insurance, property management fees, etc. can take a big chunk out of gross rents. Factor in at least 40-50% of rents going to operating expenses.
  
• Financing: 30-year mortgages will have lower monthly payments than 15-year loans, increasing cash flow. But more properties will be needed than buying in cash.
  
• Appreciation/equity paydown: Cash flow from rents will be supplemented by property value gains and tenants paying down your mortgage.

As a rough estimate, assuming you can buy properties for $150k that rent for $1,500/month with 50% expense ratios, each property may cash flow around $750/month or $9k/year. To reach $15k/month ($180k/year), around 20 properties would be needed.

However, with $2,500/month rents, only 12 properties may be required. Buying higher cash flowing properties, putting more money down, or adding value/raising rents can further reduce the number needed.

I would recommend using the BiggerPockets rental property calculator and Rehab Cost Estimate Calculator to run the numbers on different scenarios in your market. Identify a target cash-on-cash return, and divide $180k by that amount to see how many properties you'll need.

Wish you the best in your REI journey! Let me know if you have any other questions.

[Michael Smythe]

How much thought did you put into the post?

Here's an answer with as much thought:

Pay cash for a property you can rent out for ($15k+ tax, ins & mnt)/month!

[Mike Mutabazi]

Quote from @Mathew Pezon:

Hello and welcome to the BiggerPockets community!

The number of properties needed to generate $15k in net profit each month can vary greatly depending on several factors:

• Purchase price and down payment: More expensive homes require higher initial investment, but may also generate higher rental income. More affordable properties may cash flow well but take longer to scale.
  
• Rental rates in your market: Locations with higher rents (e.g. $2k/month) will require fewer properties than areas with lower rent (e.g. $800/month). Research rental comps in your target neighborhoods.
  
• Expense ratios: Repairs, vacancies, property taxes, insurance, property management fees, etc. can take a big chunk out of gross rents. Factor in at least 40-50% of rents going to operating expenses.
  
• Financing: 30-year mortgages will have lower monthly payments than 15-year loans, increasing cash flow. But more properties will be needed than buying in cash.
  
• Appreciation/equity paydown: Cash flow from rents will be supplemented by property value gains and tenants paying down your mortgage.

As a rough estimate, assuming you can buy properties for $150k that rent for $1,500/month with 50% expense ratios, each property may cash flow around $750/month or $9k/year. To reach $15k/month ($180k/year), around 20 properties would be needed.

However, with $2,500/month rents, only 12 properties may be required. Buying higher cash flowing properties, putting more money down, or adding value/raising rents can further reduce the number needed.

I would recommend using the BiggerPockets rental property calculator and Rehab Cost Estimate Calculator to run the numbers on different scenarios in your market. Identify a target cash-on-cash return, and divide $180k by that amount to see how many properties you'll need.

Wish you the best in your REI journey! Let me know if you have any other questions.

 Hello Mathew

Thank you so much for a thoughtful and detailed response, this is so helpful. As a beginner this is me giving  ground to set my real estate goals and start working toward them. I appreciate!

[Mathew Pezon]

Quote from @Mike Mutabazi:

Quote from @Mathew Pezon:

Hello and welcome to the BiggerPockets community!

The number of properties needed to generate $15k in net profit each month can vary greatly depending on several factors:

• Purchase price and down payment: More expensive homes require higher initial investment, but may also generate higher rental income. More affordable properties may cash flow well but take longer to scale.
  
• Rental rates in your market: Locations with higher rents (e.g. $2k/month) will require fewer properties than areas with lower rent (e.g. $800/month). Research rental comps in your target neighborhoods.
  
• Expense ratios: Repairs, vacancies, property taxes, insurance, property management fees, etc. can take a big chunk out of gross rents. Factor in at least 40-50% of rents going to operating expenses.
  
• Financing: 30-year mortgages will have lower monthly payments than 15-year loans, increasing cash flow. But more properties will be needed than buying in cash.
  
• Appreciation/equity paydown: Cash flow from rents will be supplemented by property value gains and tenants paying down your mortgage.

As a rough estimate, assuming you can buy properties for $150k that rent for $1,500/month with 50% expense ratios, each property may cash flow around $750/month or $9k/year. To reach $15k/month ($180k/year), around 20 properties would be needed.

However, with $2,500/month rents, only 12 properties may be required. Buying higher cash flowing properties, putting more money down, or adding value/raising rents can further reduce the number needed.

I would recommend using the BiggerPockets rental property calculator and Rehab Cost Estimate Calculator to run the numbers on different scenarios in your market. Identify a target cash-on-cash return, and divide $180k by that amount to see how many properties you'll need.

Wish you the best in your REI journey! Let me know if you have any other questions.

 Hello Mathew

Thank you so much for a thoughtful and detailed response, this is so helpful. As a beginner this is me giving  ground to set my real estate goals and start working toward them. I appreciate!

 Absolutely Mike, good luck!